Andrea Moro's webpage

Work in progress

We test the implications of a statistical discrimination model with asymmetric learning. Firms receive signals of productivity over time and may use race to infer worker’s productivity. Incumbent employers have more information about workers productivity than outside employers. Using data from the NLSY79, we find evidence of asymmetric learning. In addition, employers statistically discriminate against non-college educated black workers at time of hiring. We also find that employers directly observe most of the productivity of college graduates at hiring, and learn very little over time about these workers.

We study a general class of models with social interactions that might display multiple equilibria. We
propose an estimation procedure for these models and evaluate its efficiency and computational
feasibility relative to different approaches taken to the curse of dimensionality implied
by the multiplicity. Using data on smoking among teenagers, we implement the proposed
estimation procedure to understand how group interactions affect health-related choices.
Wefind that interaction effects are strong both at the school level and at the smaller
friends-network level. Multiplicity of equilibria is pervasive at the estimated parameter
values, and equilibrium selection accounts for about 15 percent of the observed smoking
behavior. Counterfactuals show that student interactions, surprisingly, reduce smoking
by approximately 70 percent with respect to the equilibrium smoking that would occur
without interactions.

Citation BibTeX

Bisin, Alberto, Andrea Moro, and Giorgio Topa (2011). "The Empirical Content of Models with Multiple Equilibria
in Economies with Social Interactions", NBER Working Paper #17196.

We investigate the effects of female executives on gender-specific wage distributions and firm performance.
We find that female leadership has a positive impact at the top of the female wage
distribution and a negative impact at the bottom. Moreover, the impact of female leadership
on firm performance increases with the share of female workers. Our empirical strategy
accounts for the endogeneity induced by the non-random assignment of executives to
firms by including in the regressions firm fixed effects, by generating controls from
a two-way fixed effects regression, and by building instruments based on regional trends.
The empirical findings are consistent with a model of statistical dis- crimination
where female executives are better equipped at interpreting signals of productivity
from female workers. The evidence suggests substantial costs of under-representation
of women at the top of the corporate hierarchy.

We develop a model of trade between identical countries. Workers endogenously
acquire skills that are imperfectly observed by firms, who therefore use aggregate
country investment as the prior when evaluating workers. This creates an informational
externality interacting with general equilibrium effects on each country's skill premium.
Asymmetric equilibria with comparative advantages exist even when there is a unique
equilibrium under autarky. Symmetric, no-trade equilibria may be unstable under free
trade. Welfare effects are ambiguous: trade may be Pareto improving even if it leads
to an equilibrium with rich and poor countries, with no special advantage to country
size.

We estimate the effects of obesity on wages accounting for the endogenous selection of workers into jobs requiring different levels of personal interactions in the workplace. Using data from the National Longitudinal Survey of Youth 1979 combined with detailed information about occupation characteristics from O*Net, we confirm the results from the literature finding a wage penalty for obese white women. This penalty is higher in jobs that require a high level of personal interactions. Accounting for job selection does not significantly change the estimated wage penalty.

This paper presents and estimates a search model of the labor market
where jobs are characterized by wages and work-hours exibility. Flexibility is valued
by workers, and is costly to provide for employers. The model generates observed wage
distributions directly related to the preference for exibility parameters: the higher
the preference for exibility, the wider is the support of the wage distribution at
exible jobs and the larger is the discontinuity between the wage distribution at exible
and non- exible jobs. Results show that more than one third of women place positive
value to exibility, and that reducing the cost of exibility may considerably reduce
the gender wage gap.

This chapter surveys the theoretical literature on statistical discrimination
and affirmative action. This literature suggests different explanations for the existence
and persistence of group inequality. This survey highlights such differences and describes
in these contexts the effffects of color-sighted and color-blind affrmative action
policies, and the efficiency implications of discriminatory outcomes

Statistical discrimination is a theory of inequality between demographic
groups based on stereotypes that do not arise from prejudice or racial and gender bias.When
rational, information-seeking decision makers use aggregate group characteristics,
such as group averages, to evaluate individual personal characteristics, individuals
belonging to different groups may be treated differently even if they share identical
observable characteristics in every other aspect. Discrimination can be the agents’
efficient response to asymmetric beliefs, or discriminatory outcomes may display an
element of inefficiency: the disadvantaged group could perform better if beliefs were
not asymmetric across groups (but beliefs are asymmetric because the disadvantaged
are not performing as well as the dominant group)

This paper explores the ability of pivotal-voter models to explain voter behavior in small-scale elections
using data from Texas liquor referenda. The findings provide little support for the
view that pivotal-voter models are a reasonable theory for understanding small-scale
elections. Interestingly, this is not because they cannot explain the levels of turnout
in the data, but rather because they cannot explain the size of the winning margins.
The logic of pivotal-voter models implies that elections must be expected to be close
even if there is a significant difference between the sizes of the groups or the intensity
of their preferences. With even a relatively small number of eligible voters, elections
that are expected to be close ex ante must end up being close ex post. However, in
the data, winning margins are often significant.

Citation BibTeX

Coate, Stephen, Michael Conlin, and Andrea Moro (2008). "The Performance of the Pivotal-Vote Model in
Small-scale elections: Evidence from Texas Liquor Referenda" Journal of Public Economics
92(4), April 2008, 582-96

Since 1914, the U.S. Senate has been elected and incumbent senators
allowed to run for reelection without limit. This differs from several other elected
offices in the U.S., which impose term limits on incumbents. Term limits may harm the
electorate if tenure is beneficial or if they force high quality candidates to retire
but may also benefit the electorate if they cause higher quality candidates to run.
We investigate how changes in electoral design affect voter utility by specifying and
structurally estimating a dynamic model of voter decisions. We find that tenure effects
for the U.S. Senate are negative or small and that incumbents face weaker challengers
than candidates running for open seats. Because of this, term limits can significantly
increase voter welfare.

Why are distortionary policies used when seemingly Pareto improvements
exist? According to a standard textbook argument, a Pareto improvement can be obtained
by eliminating the distortions, compensating the losers with a lump sum transfer and
redistributing the gains that are left over. We relax the assumption that winners know
the losses suffered by the losers and show that the informationally efficient method
of compensating losers may involve the use of seemingly inefficient (but informationally
efficient) distortionary policies. The risk of over-compensating losers may make distortions
informationally efficient.

We study a general equilibrium model with endogenous human capital formation
in which ex ante identical groups may be treated asymmetrically in equilibrium. The
interaction between an informational externality and general equilibrium effects creates
incentives for groups to specialize, and discrimination may arise even if the corresponding
model with a single group has a unique equilibrium. The dominant group gains from discrimination,
rationalizing why a majority may be reluctant to eliminate discrimination. The model
is also consistent with "reverse discrimination'' as a remedy against discrimination
since it may be necessary to decrease the welfare of the dominant group to achieve
parity.

This paper investigates how lack of information may bias the investigator's
assessment of the presence of statistical discrimination. We show that the nature of
the bias is such that statistical discrimination may be rejected in a Mincerian regression
even when the data is generated from an equilibrium with statistical discrimination.
This may occur even when the investigator has a more informative signal of productivity
the employers have.

This paper presents the structural estimation of a statistical discrimination
model. Although the model is capable of displaying multiple equilibria, an estimation
strategy that identifies both the parameters of the model and the equilibrium chosen
by the economic agents is developed and empirically implemented. A comparison between
the equilibria that were selected in the economy over time and the other potential
equilibria reveals that the decline in wage inequality experienced in the U.S. economy
in the last thirty years cannot be attributed to changes in the equilibrium selection.

We consider a model of endogenous human capital formation with competitively
determined wages. In the presence of two distinguishable, but ex ante identical groups
of workers, we show that discrimination is sustainable in equilibrium, even if the
corresponding model with a single group of workers has a unique equilibrium. An affirmative
action policy consisting of a quota may ``fail'' in the sense that there still may
be equilibria where groups are treated differently. However, the incentives to invest
for agents in the discriminated group are improved by affirmative action if the initial
equilibrium is the most discriminatory equilibrium in the model without the policy.
The welfare effects are ambiguous. We demonstrate that it is possible that the policy
makes the intended beneficiaries worse off: even if the starting point is the most
discriminatory equilibrium the expected payoff may decrease for all agents in the target
group